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Ex-Treasury Chief Ignored GM Plea

February 2, 2010
2 min to read


WASHINGTON - Former Treasury Secretary Henry Paulson repeatedly refused to meet with General Motors chief executive Rick Wagoner -- and then didn't believe him when he warned the company could collapse by Nov. 7, 2008, reported The Detroit News.

In a new memoir published today by Business Plus books, "On The Brink: Inside the Race to Stop the Collapse of the Global Financial System," Paulson recounts the Bush administration's deep reluctance to save Detroit automakers.

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For President George W. Bush, who ultimately saved GM and Chrysler with $17.4 billion in the final days of his term, "an auto bailout was a difficult pill to swallow," Paulson wrote. "He disliked bailouts, and he disdained Detroit for not making cars people wanted to buy."

GM started seeking cash in the fall, Paulson writes.

On Oct. 13, Paulson and aides met with Wagoner and two GM board members, but only reluctantly.

"Rick had been calling me, trying to set up a meeting for some time, but I had declined to so," Paulson wrote, insisting that the $700 billion Troubled Asset Relief Program should not be used to bail out automakers.

At the meeting, Wagoner warned that GM faced a "bank-like run from creditors and suppliers who had not been paid on a timely basis."

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Wagoner said GM needed $10 billion: a $5 billion loan and a $5 billion line of credit. "We need a bridge loan to avoid disaster and we need it quickly," Wagoner said, according to Paulson. "I don't believe we can make it past Nov. 7 (Election Day)."

But Paulson didn't believe Wagoner.

"He and his team may have sincerely believed this, but I knew better. I worked with companies like GM long enough to know that they did not die quickly," he wrote.

Instead, Paulson told Wagoner to work with Commerce Secretary Carlos Gutierrez about getting help elsewhere.

"I was loath to do anything that might appear to reflect politics," Paulson said.

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Wagoner has declined to comment through a spokesman since being fired by the Obama administration in March 2009.

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